By Dan Christensen, FloridaBulldog.org
Waste Management has successfully rebutted crime-fraud allegations that, if upheld, would have forced the trash giant to disclose confidential company records it says are protected by the attorney-client privilege.
In a ruling last week, Broward Chief Judge Jack Tuter accepted as “reasonable” company explanations for seven allegations leveled by Bergeron Environmental and Recycling regarding internal documents pertaining to Waste Management’s $510-million asset purchase of Davie’s Southern Waste Systems (SWS), including Sun Recycling, in 2016.
Bergeron is suing Waste Management, and others, contending it misled federal and state antitrust regulators to win approval of its takeover of SWS as part of a conspiracy to ruin Bergeron’s business and steal its customers.
The acquisition resulted in sharply higher recycling costs or cutbacks in recycling programs among the 17 Broward municipalities that until July 2018 had contracted with the joint venture Sun Bergeron.
In November 2018 Tuter approved a special master’s finding that Bergeron’s attorney had presented sufficient evidence to establish a prima facie case that Waste Management’s effort to hide certain corporate records was bogus because it may have sought legal advice to perpetrate a crime or fraud. Bergeron accused Waste Management of violating a trio of federal criminal statutes regarding making false statements to a governmental entity.
24 crime-fraud documents
The special master identified 24 documents he found to be subject to the crime-fraud exception to the attorney-client privilege.
Attorney-client privilege is the legal right to keep secret communications between a lawyer and a client. One exception to that right, however, is “crime-fraud” that holds that no lawyer-client privilege exists when “the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew was a crime or fraud.”
Tuter heard six hours of testimony last October at a rebuttal hearing, including from Waste Management’s Vice President of Legal, Sang-Chu “John” Tsai. Waste Management’s attorneys presented evidence that there was never any intent to violate the law. After the hearing, however, Tuter observed that the evidence had revealed the “sloppiness and mistakes” in the legal work that had accompanied the SWS takeover.
“The Court should be clear as to the impact of this order,” Tuter wrote at the conclusion of his 12-page ruling last week. “The evidence presented by [Waste Management] regard the mishandling of the closing documents to this transaction and its communications with regulatory agencies was at times suspect. The Court’s findings reflect ONLY that [Waste Management] proved by a preponderance of the evidence that there were reasonable and sufficient explanations for their conduct and communications. Ultimately, a fact finder will have the final say on evidence.”
Thus, Tuter’s crime-fraud ruling means that Waste Management can keep those 24 documents confidential, for now.
Fort Lauderdale attorney Brian K. Hole, Waste Management’s lead lawyer in the civil case, declined to comment.
But Waste Management spokeswoman Dawn McCormick said, “The ruling in this case affirms that Waste Management Inc. of Florida’s acquisition of certain assets of SWS-Sun Recycling in 2016 was properly vetted and adhered to all federal, state and local laws. Waste Management continues to be committed to operating ethically at all times to benefit the communities we serve.”
Bergeron’s attorney, Mitchell Berger, said, “We are hopeful that our case will prevail in front of the ultimate trier of fact, and other than that we have no comment.”
Questions about regulators
The fight over the documents is important because the regulators’ actions in the Waste Management/SWS deal are central to the lawsuit.
Both the Department of Justice’s antitrust division and the Florida Attorney General’s antitrust section reviewed the Waste Management/SWS deal and both agreed to allow it to go forward.
But one document that leaked out from the court clerk’s office in May 2018, and obtained and published by Florida Bulldog, raised questions about those reviews, while angering municipal officials who are Waste Management’s customers.
The document is a two-page letter sent by then-Florida Attorney General Pam Bondi’s office to Waste Management’s lawyers in December 2015. It showed that the state OK’d the SWS buyout only after being assured by Waste Management that its Broward municipal customers would be allowed to renew their expiring contracts in July 2018 for another five years on the same terms, conditions and prices. Neither Bondi nor her successor, Attorney General Ashley Moody, enforced that condition or others contained in the letter. Bondi never even informed the cities of the letter’s existence.
“The crux of this case centers on the legitimacy of the underlying transaction, the DOJ antitrust review, and voluminous discovery pertaining to that review,” Judge Tuter wrote in a previous order.
Trial is scheduled for this fall. No exact date has been set.